This result generalizes the key result of Ganesh et al. [11] to the N-level supply chain regarding
the effect of demand substitution on the value of information sharing.
Additionally, we find the following new results. The reduction in the
value of information sharing because of substitution is higher (i) if the
degree of substitution is more, (ii) if the number of products is more,
(iii) if demands of products are less correlated, (iv) for firms that are
more upstream and (v) if the degree of information sharing is higher.
Our results suggest that firms, especially those that are upstream in
the supply chain, may face a significant risk of over-estimating the
value of information sharing if they ignore substitution, demand
correlation, and partial information sharing effects.